Is Extreme Market Volatility Here To Stay With Jeff Small And Hoste Langeraar February 18, 2018
Guests: Hotse Langeraar and Jeff Small
The Income Generation With David J. Scranton
The bottom line though is that volatility like what we’re experiencing now, and we’ve experienced that volatility off and on ever since the 2000 and every secular bear market before that, is your typical cyclical volatility. You can think of it as the smaller waves within a bigger wave. And here’s why it’s so incredibly important for investors over the age of fifty, Income Generation members, to understand and be aware of these bigger waves even though most advisors want to focus on the smaller ones you know as I pointed out last week. Consider that since the turn of the century buy and hold stock market investors have experienced an average return of a little bit over five percent. Why? Because of those two giant crashing waves those two major stock market corrections the one that started the beginning of the year 2000 when the tech bubble burst and the one that started 2007 with the financial crisis. They washed out all the previous gains and forced investors start building again from square one and you know that process takes time that rebuilding. Remember, it took seven years for the market recover from to its previous peak after the 2000 drop in six years after the 2008- 2009 drop six and seven years just to break even again and start building. Now obviously, if you’re within ten years of retirement that’s not a position that you want to find yourself in financially.
Time just isn’t on your side after a certain age as we all know, so the question becomes could the return to volatility we’re seeing in the markets now be a sign that the third major market drop is on the way? It could be. Smaller waves usher in the bigger way if well no one knows for sure of course but keep in mind that we’re still less than twenty years in the secular bear market cycle and that third major drop still has plenty of time to get here and the odds are that it won’t get here are mathematically very slim. I’ll talk about that a lot more later in the show now it’s time to welcome back Hoste Langeraar. So, we know what the Federal Reserve has done. The Federal Reserve just printed more money trying to get the economy stimulated.
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